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In Tel Aviv go to the Nahlat Binyamin market on Tuesdays and Fridays. Lots of stalls of artists and craftsmen displaying their goods.Also walk around the Neve Tzedek quarter for cute little shops. Jaffa flea market and the old city are is also fun. Tzfat is small and you will no doubt see the old quarter and its small shops and the artists quarter. In Jerusalem, you will probably do most of your shopping in the old city. Be aware that many of these places are tourist traps and you can bargain with the price (not in Tel Aviv I don't think). Traditional gifts include Armenian pottery, glassware, silverware, but there are a lot of modern Israeli craftsmen offering different things. Enjoy!!!